Iran sees decline in oil exports

December 26, 2006

WASHINGTON (AP) -- Iran is suffering a staggering decline in revenue from its oil exports, and if the trend continues, income could virtually disappear by 2015, according to an analysis released Monday by the National Academy of Sciences. Iran's economic woes could make the country unstable and vulnerable, with its oil industry crippled, Roger Stern, an economic geographer at Johns Hopkins University, said in the report and in an interview. Iran earns about $50 billion a year in oil exports. The decline is estimated at 10 to 12 percent annually. In less than five years exports could be halved and then disappear by 2015, Stern predicted. For two decades, far longer than its designation by President Bush in January 2002 as part of the "axis of evil," the United States has deployed military forces in the region in a strategy to pre-empt emergence of a regional superpower. Iraq was stopped in the 1991 Persian Gulf War, but a hostile Iran remains a target of U.S. threats. The U.S. military exercises have not stopped Iran's drive. But the report said the country could be destabilized by declining oil exports, hostility to foreign investment to develop new oil resources and poor state planning, Stern said. The analysis supports U.S. and European suspicions that Iran is trying to develop nuclear weapons in violation of international understandings. But, Stern says, there could be merit to Iran's assertion that it needs nuclear power for civilian purposes "as badly as it claims." He said oil production is declining and both gas and oil are being sold domestically at highly subsidized rates. At the same time, Iran is neglecting to reinvest in its oil production.